There’s myriad reasons people go into real estate. Maybe they like helping people, or viewing and showing houses, or being in charge of their own schedule. However, as independent contractors, it’s important that agents have a solid hold on the financial side of their business, too. This is vital come tax time, arguably one of the most stressful times of year for the self-employed. Below are three things agents should keep in mind when working their books throughout the year.
From Facebook ads to 3D walkthroughs, it’s great to have many different ways to attract potential buyers or listings. But if agents aren’t tracking their income and expenses per listing, they could actually be losing money. Know what you spent and what you made for each transaction. One easy way to navigate this is with QuickBooks Self-Employed, which allows users to record commissions and expenses for each listing. Once your transaction is complete, a report is generated to show each listing’s profitability.
It’s important to carefully track your expenses year-round, so come tax time you’re not spending hours digging through piles of fading receipts, or, worse, missing out on deductions. Agents who set up separate business bank accounts can track their transactions easier, especially if they also use expense tracking software like QuickBooks Self-Employed. The app allows users to quickly categorize expenditures, so all the information is available come tax time. You can also use the app to grab quick photos of your receipts so you can toss the paper and go digital.
From driving buyers around to checking on listings and meeting with potential clients, agents often spend a lot of time in their car. The IRS has pretty strict rules regarding how you document your business mileage, so it’s important to keep careful account of each mile you drive for work. The QuickBooks Self-Employed app automatically tracks your mileage, which means you don’t have to manually record anything. All you need to do is swipe to classify a trip as “business” or “personal,” and you’re good to go.
If you properly record your profit, expenses and miles all year long, tax time will be smoother and less stressful.
For more tax insights, please visit QuickBooks Self-Employed, proud partner of the NAR REALTOR Benefits® Program.